SPECIAL: Livingston Predicts Upturn in 1Q/02

He advises colleagues to start ventures now because land prices will shock them if they wait until next year.

"Land prices have stabilized nationally, but while the trend is also evident in Central Florida, there is a marked shortage of land where development is currently permitted," the founder/chairman of Maitland, FL-based Realvest Partners Inc. tells GlobeSt.com. "Clearly, higher land prices are imminent."

Livingston, a director of Virginia-based CORFAC International Inc., says, "Given the long lead time to develop, projects that are getting under way now will reap the greatest rewards at the first surge in demand," He stresses, "Now is the time to be aggressive."

The signals are out there. "Interest rates are at their lowest in a generation. Cap rates are up and buyers have withdrawn" from the market, Livingston contends.

"Because corporations and tenants are less active nationwide, strong rent growth has slowed somewhat and local market conditions mirror that trend," the developer says. "But Central Florida's low construction rate is generating supply and demand imbalances that are favorable to investors."

He is confident "increased demands will push rents higher almost immediately, once the economic cycle shows positive signs."

Livingston urges developers to follow the strategies of sophisticated investors: "Hold what you own; refinance at lower rates; develop new projects; and acquire existing properties."

Developers can plan for demand a year from now by plugging broadband access and energy availability into their enterprises; offering high parking ratios and high clear spans; flat floors; flexibility; and other amenities suitable for buildings in highly competitive submarkets.

"No regional market is immune to national and international trends, but the Central Florida region around Orlando tends to be less affected than most," says Livingston whose family has been a landowner here for 80 years.

"National polls and the press tell us most Americans believe we are either in a recession or about to enter one," the developer notes. "This has driven real estate cap rates higher and caused buyers to withdraw from the market," he says.

In Orlando, however, "widespread anecdotal evidence paints a much more vibrant picture of a local economy that is still growing." He says, "real estate demand, though generally slower, remains at a desirably high level."

He acknowledges the build-to-suit market has slowed in Orlando and in the rest of the state, as it has nationally. "Prospective tenants are more modest in their space requirements and tend to follow their business budget more carefully," Livingston says.

He predicts aggressive developers and investors in today's market will find nine or 10 months from now that "real estate will be an investment of choice for the long haul, once again."